Tel Aviv shares advanced on Thursday, following stock markets worldwide as investors continued to be reassured that the U.S. Federal Reserve would unwind its accommodative stimulus with care. Israeli bond prices rose and the dollar turned higher after several weak days.
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The benchmark TA-25 index ended the day up 0.3% at 1,226.89 points, while the broader TA-100 advanced 0.45% to 1,111.21 on turnover of NIS 1.22 billion. For the week, the two indices showed gains of 1% for the TA-25 and 1.4% for the TA-100, bringing their returns so far this year to 3.5% and 5.9%, respectively.
The week's biggest gainer was the TA-Insurance index, which rose 4.7% to bring its year-to-date gain to 18.1%.
If investors were at all distressed by TASE CEO Ester Levanon's decision to step down by the end of the year, they didn't show it. The market has been up for both of the two days since news of her departure got out.
"The Tel Aviv bourse is taking Levanon's resignation with equanimity and waiting to see who will replace her and what her successor's direction will be," said Nir Peleg, CEO of Kryptonite Hedge Funds. Nevertheless, he added, "It is hard to see the engine that will serve as the basis for a sustainable move higher in the local share market."
Fed Chairman Ben Bernanke testified before Congress for the second consecutive day on Thursday, this time to the U.S. Senate Banking Committee. The day before, he had reiterated that the Fed would only start phasing out its stimulus once it is sure the economy is strong enough to stand on its own feet.
In early afternoon New York time, the Standard & Poor's 500 Index was ahead 0.6% at 1,690.63, and the Nasdaq Composite Index up 0.2% at 3,616.74. U.S. stocks were also supported by strong quarterly earnings reports from IBM and Morgan Stanley. European equities FTSE EuroFirst 300 rose 0.9%, as the broad STOXX Europe 600 broke above a resistance level.
The dollar rose 0.35% against a basket of currencies while the euro was down 0.4%. Against the shekel, the dollar strengthened sharply, adding 0.7% to cross back over NIS 3.60 and reach a Bank of Israel rate of NIS 3.6010. The euro advanced by close to 0.4% to NIS 4.7197.
"After it sunk briefly [Wednesday] night to below the critical level of NIS 3.55, the dollar succeed in recovering slightly against the shekel, against the backdrop of Bernanke's remarks before Congress, although he reiterated what he had said earlier," said currency trader FXCM.
"The plan to reduce quantitative expansion will likely support the dollar in the short run and perhaps even drive a correction on the sharp depreciation we’ve seen in recent days. But in the longer term, the unequivocal statements made last week [by the Fed] put the dollar at a disadvantage globally and against the shekel," FXCM said.
In TASE fixed-income trading, the Tel-Bond 20, 40 and 60 indices extended their gains from Wednesday to rise another 0.18% and 0.22%. The government's 10-year Galil bond rose 0.23%, cutting their yield to 1.61% while the unlinked Shahar bond for the same duration edged up 0.06% to a yield of 3.71%.
In equities trading, Israel Chemicals led the most actives, dropping 0.9% as NIS 119.3 million in shares changed hands. Teva Pharmaceuticals rose 1.8% on turnover of NIS 71.8 million. Leading the TA-100 higher was Allot Communications (4.5%), biotech company Kamada (4.2%) and Internet company LivePerson (3.8%).
Gilat plummeted 13.7% by close after the maker of satellite communications gear revised down its 2013 projections. It said revenue would be between $335 million and $345 million, rather than the $350 million to $360 million originally projected, and that earnings before interest taxes, depreciation and amortization are expected to be approximately 7% of revenue instead of 9%.
With reporting by Reuters.